Commodity Trading

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Industry experts and pundits would like you to believe commodity futures trading is only for the wealthy and sophisticated. However, a number of savvy traders use the commodity markets to hedge inflation and energy woes as well as prepare for the ever-increasing fiscal volatility we are facing in the New Millennium. The book covers Options and Spreads on Commodity Futures. This little known area of the commodities market is ideal for people who have a steady income … More >>

Commodity Trading 101: How to Exploit the New Bull Market in Raw Materials without Getting Killed

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Teaches the revolutionary, and highly profitable technique of techni-seasonal trading. This utilizes technical analysis tools to confirm potential seasonal trades. Outstanding results presented along with complete rules for trading…. More >>

Techni-Seasonal Commodity Trading

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Noted technical analyst J.D. Hamon reveals tested techniques and powerful new strategies which prove you can win big in commodities…. More >>

Advanced Commodity Trading Techniques

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Discusses a simple, but effective system for timing market entry. Based on a technique used by the legendary W. D. Gann, who said of this method, “You can make a fortune by following this one rule alone!” Incorporates a technical trading rule, which utilizes a consistently competitive pattern of market behavior. Applies to all markets and to all time periods, whether short term (intraday), intermediate, or long term. Many traders have contacted us months after r… More >>

Trading Rule That Can Make You Rich: Precision Bid Commodity Trading

• ISBN13: 9781601380036
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Product Description
Many people have become very rich in the commodity markets. It is one of a few investment areas where an individual with limited capital can make extraordinary profits in a relatively short period of time. Commodities are agreements to buy and sell virtually anything that is harvested except onions. (A 1958 federal law prohibits trading onions.) Such goods are raw or partly refined materials whose value mainly reflects the costs of finding or gathering them. They ar… More >>

The Complete Guide to Investing in Commodity Trading & Futures: How to Earn High Rates of Returns Safely

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Curious about commodities? If you’re looking for a good book with an overview of futures, this one works. FUTURES 101 tells how money is made and lost in today’s fast-paced futures market and does so in an interesting style – part commentary, part verse, snippets rather than long chapters. Plus it does not try to sell you something or promise the moon. This is all about commodity futures trading, a financial arena bigger than the stock market yet relativ… More >>

Futures 101 : An Introduction to Commodity Trading

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“I’ve been trading stocks and commodities for more than 30 years, and I’ve read any number of how-to books, but George Kleinman’s The New Commodity Trading Guide is as clear, precise, and useful as any book I’ve come across during my career. I cannot recommend it strongly enough, if for no other reason than George finally explains ‘The Voice from the Tomb’ better than any of the old guard at the CBOT. Read it and reap.”–Dennis Gartman, editor/publis… More >>

The New Commodity Trading Guide: Breakthrough Strategies for Capturing Market Profits

Commodity trading

Commodity trading is the trading in commodity derivatives, where commodity refers to any bulk goods traded in the exchange. Mainly Bullion, Energy, Metals and Agricultural Commodities are trading in the commodity market. Derivative is a kind of financial security whose price is depend upon or derived from one or more underlying assets. The derivative assets may be in the form of stocks and bonds of corporate, commodities and currencies of various countries. Commodity trading basically refers to trading where investors buy or sell commodities, through future transactions or contracts.

A future is a standardized forward contract that requires delivery of a commodity at a specified price on a specified or predetermined future date. In this case the buyer is obligated to fulfill the terms of the contract. The buyer and seller have the option to square up their position before expiry of the contract subject to other conditions governing each contract. Although the commodity trading pattern is quite similar to equity share trading, it involves smaller margins and is lot easier to understand. A commodity trader can start with commodities like gold and grains, which attract very low margins. As well, the time limits for commodity trding stretch from morning 10 O’clock to mid-night. Hence it is possible to trade after completing day-to-day work.

Requirements – physically & mentally

Find a broker/sub-broker to open account to trade with commodity. The broker if satisfied with the economic standing of the person, they may ask pan card, demat account, bank account and margin money for opening account with him. After completing these formalities, the person allowed for commodity trading.  Margin is the upfront money payable to broker before taking a position in the market. Like equity trading activity, the commodity trading requires the easy accessibility of information and liquidity facility. The trader can easily reduce risk by effective diversification. The low risk trading strategies include both delivery spreads and spot-futures arbitrage. The trader can take advantage of the low margins and take directional calls on the markets. The market is diverse in nature, and it is suitable for the day trader/speculator, long-term investor, hedger and arbitrageur.

Risk and Return

Higher the return there is risk also high; lower the return the risk is also low. Based on the risk-return appetite, the trader can enjoy benefit or return. Commodity trading is basically futures trading giving rise to leveraged positions. For this sake, mostly the wealthy and knowledgeable traders campaigning towards commodity trading place. Risk is inherent in any investment, by proper entry and exit strategy can safeguard from loss. The uncertainty and risk are part of all derivative markets and risk factors in commodity futures trading are similar to futures trading equity markets. The key difference is that the information availability on supply and demand fluctuations in commodity markets may not be as tough as the equity market. The return from the commodity market is also handsome, if the trading strategy of the trader worked out properly. The understanding about the technical and fundamental factors of global as well as domestic economy helps to earn superior returns from the commodity trading. Inflation is the big problem in the present economy; commodity is the good tool of investment strategy to beat inflation risk. Commodities are the hedge against inflation because unlike equity, commodity prices move in tandem with inflation. Besides, buying commodities make your investment truly global and there are no issues with company management or cash flow involved, all of which make commodity trading a pure demand and supply match.

Clearing and Settlement

Delivery based trading is now becoming popular. Each contract has a lot size and delivery size; it varied from asset to asset. Market participant are required to negotiate one the quantity and price of the contract, as all other parameters are predetermined by the exchange. Delivery is in dematerialized form and can be rematerialized at time at the request of the trader with the depository organization.

Conclusion

The markets are very lively and dynamic. A systematized and cautious moving will help to being a successful trader. Patience, discipline and knowledge are all important qualities to develop successful and fruitful commodity trading.

Desp: Interested in making money? Try commodity trading and what better way than doing it online.

Today’s technology changes very rapidly. In order to keep up with the rapid pace of the market online, you should be able to initiate and maintain a system for online exchanges using the latest technology. It should be able to provide the latest information on how you trade and take care of your finances.

Some online markets have helped to accelerate the speed of the commodity trade. As an investor, you should find a company offering an advenced system that allows you to get one over on today’s fluctuating markets. A system should help to give flash fills in the nick of time to remain competitive.

You need to evaluate the company with regard to the benefits you receive with on-line trading systems-

1) Ensure that the platforms easy to enter. It must contain menus, which offer the greatest possible number of options with regard to the varieties of trading systems, including the limit orders, closing the market, the market for orders, futures options, and thestop orders. Even when you are unsure of the trdaing limit, t must allow one to park a transaction while you observe the market and ponder over the trade.

2) It should allow you to access directly when you wish to trade online.

3) It provides real-time access to the latest updates to your accounts. You can view information, such as your account’s balance, the profit or loss in every trade, and the margin which remains after the last transaction.

4) It provides an chance to buy and sell in foreign markets with the convenience of internet trades. Trade on any market you wish to.

5) You must choose a company with excellent technical teams that can demonstrate the use of their platforms via the phone to an investorr with the greatest patience, until you are familiar with it.

6) It provides market trades with a single touch option. It just means that, by clicking a button you can go live, or hold the order for a moment.

7) It comes with tradegraphs applicable to every market. It provides you with the option to build analytical tools, so your style and the methods of negotiation are supported aptly.

Investors get quotations and research data where they can access it. It is provided by professionals dedicated to helping the trader reach his goals.

9) It gives the operator safety by providing a supportive environment by telephone. Their staff conducts examinations and track your account while you vacation or attend a business trip. With your intervention, the staff get your orders placed when you require.

10) They continue to provide tips and advice, even if the operator chooses to become independent. Traders can still use brokers, staff on the management of information, technicians, instructors on risk management, and support staff.

The company you choose could provide you with advice even after you go independant. But make sure the final judgement is your own.

So much of what is written about commodity trading has to do with investment strategy; what you should buy, how much you should pay, or which tropical island you should buy with all of your profits. While the positive side of investing cannot be emphasized enough, an important part of your trading plan is knowing what to do when things don’t go so well. Commodity prices and how they can change require you find ways to protect your investments.

Two of the best ways to protect your investments against commodity price changes are limit orders and stop loss orders. These are both protective orders that help you keep your money, not give it away to changes in commodity prices.

Limit Order

A limit order is a futures trading order that instructs your broker that when an underlying asset reaches a certain price or better, he or she should execute the order and purchase the desired asset at the best commodity price available. If the price of a commodity does not drop to the requested level, your order is not filled.

For example, if the price of corn futures is at $5.00 dollars per bushel and you place a limit order at $4.50, your order will not fill unless the price drops to $4.50. If the commodity price falls from $4.75 to $4.40, your order will be filled at $4.40. Conversely, if the commodity price only falls to $4.55, your broker will not fill the order. This type of market order helps protect your money by getting you the commodity price you want and not filling if your price isn’t reached.

Stop Loss Order

A stop loss order is a commodities trading order that instructs your broker that if an asset you are holding drops to a certain level, he or she should sell it. Once the price has been reached, the commodity broker will implement the trade, regardless of the current commodity price. If the price never falls to the agreed amount, the order will not be executed.

As an example, if you enter a stop loss order to leave a crude oil position you are holding when the price drops to $55 a barrel, your oil futures have these possible scenarios:

o If the price of oil drops to $55, your commodity broker will enter a market order to sell your position, getting the best available price.

o If the price of oil drops to $55 but then quickly drops to $54, that may be the price you get. Remember, once the price touches $55, your broker will place a market order but that space of time can allow the price to temporarily drop more.

o If the price of oil drops to $55 but then quickly rebounds to $56, the trade will be initiated ever though the amount is back above your target for the commodity price. It is likely you will get the $56 but your futures option will still get executed.

How These Orders Help Protect You

Commodity prices in the futures markets have the potential to move quickly. If you are holding a futures contract, it is easy for things to get volatile and your position can become compromised without your even knowing. By using limit orders, you can enter a position at the commodity price you choose, not pay more because you can’t monitor its movement; your broker can do the work of watching the commodity price for you.

Stop loss orders don’t protect you before you make a trade; they protect you AFTER you enter a position. If you are not sitting by the computer watching commodity prices, a negative move could occur before you can move to stop it. By having a stop loss order, you can watch your positions without being in front of your computer.

Conclusion

Stop loss orders and limit orders can help the investor to form part of a strong stop loss strategy. While there is plenty written about profits when commodity prices rise, it’s good to know you have a plan in place in case commodity prices fall.

Author: Stephen Bigalow
Article Source: EzineArticles.com
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One of the interesting features of futures options trading is the versatility. With futures commodity trading, you are not just buying or selling; every decision brings other possibilities and more interesting variables. Below are some of the typical ticket types in futures commodity trading.

The Market Order

The market order is the most common order for the beginner investing in futures commodity trading. Once you have decided to open or close a position, you can use a market order. This futures commodity trading order is executed at the best possible price obtainable at the time the order reaches the trading pit.

The Limit Order

A limit order is a directive to buy or sell at a specific price. In commodity trading, limit orders to buy are placed below the market while limit orders to sell are placed above the market. Since it is possible that the market may never reach a limit order, an investor could miss out on the position if he or she uses a limit order. In most instances with this futures commodity trading order, the market must trade through the limit price for the customer to get a fill.

Market If Touched (MIT)

MIT orders serve the opposite purpose of stop orders. Buy MIT orders are placed below the market and Sell MIT orders are placed above the market. An MIT order is usually used to enter the market or initiate a trade. An MIT order is similar to a limit order in that a specific price is placed on the order; an MIT order becomes a market order once the limit price is touched or passed through. In futures commodity trading, a MIT order would be considered on of the basic commodities trading orders.

Stop Orders

Stop orders can be used for three different strategies.

o To protect against big losses on long or short positions (as stop loss orders)

o To protect a profit on an existing position

o To start a new long or short position

Fill or Kill

The fill or kill order is used by successful traders wanting an immediate fill, but at a specific price. The broker on the floor will bid the order three times and if it is not filled, it is killed, or cancelled.

Spread

A spread is used when trading commodities by an investor who wishes to take long and short positions at the same time in an attempt to profit via the price difference, or “spread” between two prices. A spread can be established between different months of the same commodity, between related commodities or between the same or related commodities traded on two different exchanges. For example: Buy 1 June Corn, Sell 1 September Corn plus 5 to the September sell side. This means that the customer wants to initiate or liquidate the spread when September corn prices are 5 points higher than June corn prices.

Bull Call Spread

A bull call spread is an advanced commodity option trading strategy that can be used in times of high volatility. The spread is the purchase of at or near the money call and the sale of an out of the money call. The maximum profit potential is the difference between the strike prices minus trading costs. The maximum loss potential is the total cost of the spread.

Bear Put Spread

A bear put spread is a futures commodity trading technique that is used just like a bull call spread but is used in anticipation of lower prices and therefore uses puts instead of calls. This type of futures commodity trading can be considered as defensive investing since it is done during high volatility periods.

Straddle

A straddle is a futures commodity trading strategy that is used to take advantage of a large price move up or down. This strategy, a buy straddle, involves buying a put and a call at the same strike price and preferably at the money. The investor is hoping for either the call’s or the put’s premium to increase enough to offset the costs and make a profit.

Strangle

A strangle is a futures commodity trading strategy that is used to take advantage of a large price move up or down just like the straddle but it uses out of the money strike prices. An example of a buy strangle would be buying a $3.10 December corn call and buying a $2.90 December corn put when the December corn futures price is $3. This futures commodity trading strategy seeks to profit from the different strike prices.

Conclusion

Futures commodity trading is very interesting because there are so many possible positions to take. By learning these positions, an investor can make money futures commodity trading whether implementing a calendar spread or buying puts.

Author: Stephen Bigalow
Article Source: EzineArticles.com
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Many of the more common commodity trading strategies actually serve two purposes. The turn of a profit is but one. A hedge is the other purpose. Hedging is a method of minimizing risks by attempting to purchase some form of insurance. As well as minimizing risks, it also usually caps potential profits. One of the strategies to accomplish this is known as the spread.

The majority of the commodities trades do not involve trading the commodity directly, but more in buying or selling a futures contract. “Going long” and “going short” are two of the most basic strategies

To go long means to purchase a futures contract while anticipating that the price will rise before the contract expires. Futures contracts are very similar to stocks or options because vary rarely do the traders or specialists have any actual contact or participation with trading the commodity itself.

Conversely, to go short means to sell the contract while anticipating that the price will drop before the contract expires. Many novices are often perplexed by this strategy. The have trouble wrapping their mind around the concept that the contract is sold by the trader before they even own it.

While the notion may be confusing, the practice is quite simple. While the technicalities remain unseen by the traders, the inner workings are rather simple. The contract is borrowed and the one is bought to make of the shortfall later.

An illustration of this concept is as follows: Trader X sells a futures contract in May for September wheat for $6.00 per bushel. The contract will be written for a minimum amount, which is typically around 5,000 bushels. The price falls in August to $5.40 per bushel. This will yield a profit of 60 cents on each bushel, which equals $3,000, excluding commission. The profits and losses for these ventures are settled daily for trading accounts and the broker balances the books by buying a contract of the same type on the trader’s behalf with the trader’s money.

Effective trading strategies are a combination or different types and lengths of contracts. Throwing in some form of spread is one of the simplest. There are a number of varieties that can be executed, but a simpler approach is sometimes the best move.

An example of this more simple approach is illustrated in this hypothetical situation. In May, the price for a July wheat contract is $5.90 per bushel and for a September contract the price is $6.00 per bushel. By predicting the spread between these two and by anticipating changes before July to greater than 10 cents – and to be correct in that prediction could yield a profit by selling the July and purchasing the September. By shorting July and going long in September, you do profit.

This profit is incurred by watching carefully the behavior of the contracts and acting accordingly. In June, the July contract may have risen to $6.00 per bushel and the September to $6.25 per bushel. By liquidating both positions, in other words, settling both contracts, this results in a 10 cent loss on the July contract, but a gain of 25 cents on the September contract. This means a 15 cent profit per bushel. A small commission will be incurred on the turn around, but it is minute. On a contract that covers 5,000 bushels, this means a net gain of $750.

While a larger gain would have resulted had July not been shorted, but all trading carries risks and it is impossible to predict the future, especially in the stock market, with any degree of certainly. Hence, the term, speculation is used to refer to these activities.

There is an element of rationale for betting against yourself by shorting and by going long at once allows the trader to hedge their best on whichever direction they expect the market to take. Utilization of this spread strategy as well as with many other variations does succeed in capping the potential for profit. However, it does work to minimize downside losses as well.

Commodity Trading can be a satisfying venture when you invest here. Everybody dreams of being rich, and we hear so many stories of people getting to be millionaires with small investments in commodity trading. On the other hand there are also many stories of people who have lost all their money with commodity trading, so it could be risky business. You need a good level of intelligence, skill and the necessary experience to venture into this field. So if you would like to get into it, maybe a few lessons at commodity trading are the need of the hour.

Using computers you can simulate commodity trading in a virtual world. What this means is, you can use simulated or make believe money to have a trial run of sorts, much like a game where you use play money to buy and sell stock that the computer generates. There are certain software available just for this. But keep in mind, that won’t help you predict real market ups and downs.

Of course these programs can give you a good feel of what to expect when you hit the real markets. You will be prepared how to react when the markets open and close for the day.

With these software, once you get a feel of the way the markets work, you will definitely lower your risks and decrease the chances of losing out. At the same time you increase your chances of getting rich. Never forget that while commodity trading can quickly make you rich, things could go the other way if you aren’t careful. That is why it is great to be able to practice before you enter the real market. What better way to practice than with a computer simulation where you don’t spend any real money?

The veterans will tell you there is no better way to practice than get a taste of the real thing. This is obviously true; but why not get a little basic simulated practice before you practice in the real world?

If you do not wish to invest in software, you could also look up some web sites that offer you the simulation service. Many of them require a registration fee that you can pay with a credit card. If you are new to the software scene, you could always look up such web sites. In any case, if you are a beginner at the stocks, do try and get some sort of simulation run before you get to the markets.

Making money in the stock markets is not about luck, as many laymen believe. It is about getting a good feel of the markets and using your intelligence to predict which share of likely to move up or down.

Commodity trading is an exciting investing opportunity that was once limited to brokers but that thanks to the internet anyone can play in. Here’s how to get started with commodity trading.

Commodity markets move primary or raw product which are traded on commodities exchanges and it’s important that you know how to get started with commodity trading so that you learn how to buy and sell commodities.

The internet has opened up the commodity market and primary products like sugar, corn, precious metals, and so much more are being traded online. Commodity marks deal with non financial instruments like bonds. Once you know how to get started with commodity trading you won’t have any problem deciphering the different categories.

Prior to online trading there were places designated for commodities exchanges. You would have to appear there or have a broker that would negotiate for the commodity you wanted. Needless to say how to get started with commodity trading was a lot more complicated.

Today finding out how to get started with commodity trading is available 24/7 on the internet with access being very easy both for learning and for buying and selling. There is no reason to have a broker anymore. The electronic age has certainly changed how we do business.

One of the biggest perks now is the transparency of the price. The top 5 bids are displayed which allows for fair trade. It also makes it easier to learn how to get started with commodity trading.

Commodity investing is an investment that can make you some nice profit. But of course they also carry some risk. Learning how to get started with commodity trading and how to trade right will give you the least amount of risk.

There are all kinds of websites that offer commodity trading online. Generally there is a fee for setting up an account. Some even have a minimum amount that you must put in your account. Most of these sights have a host of tools to help you learn how to get started with commodity trading and to help you make the best trades possible.

Commodity training online is a very lucrative business and if you really would like to move yourself into a different earnings class may we suggest you learn how to get started with commodity trading. You won’t be sorry and it won’t be long before you are making all the right moves.

Author: Joel Teo
Article Source: EzineArticles.com
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Commodity trading is quickly becoming a weapon of choice of an increasing number of people that wish to make large returns from investments. This is thanks to the fact that commodities represent a constantly growing list of wares which could be bought or sold, and the list contains all kinds of consumables available on the markets today.

In comparison to some other trading options, commodity trading represents innumerable options, and they are easily figured out by people new on the trading scenario.

Smaller traders at first trade with commodities like metals, poultry and such thanks to the fact they have lesser margin as compared to other products.

Gurus say that people new to the scene should start using a combination of around 6 to 8 products at their initial attempt to make sure they have proper monitoring and to play it safe at the same time. Commodities trading are usually evaluated on an everyday basis, so it is done when there are fewer details to look at when you are a beginner.

To tell you the truth even a trader with a lot of experience would not be too comfortable dealing with more than around eight commodities at a time. This is because it is just too hard for any individual to evaluate the constant changes of more number of products in the market, single handedly.

It is best to avoid larger commodities when you are a beginner, for the obvious reason that you risk losing more money.

You would do well to begin with a market like corn, the ups and downs here are something you can usually foresee, and you do not have to worry a lot about high margins. And then wheat could be a good option as well, thanks to similar reasons. As far as a meat market goes cattle is an option, but some gurus do not recommend it.

Commodities like beans and sugar are some with higher ranges. Sugar was earlier considered as a low margin commodity due to the fact that it does not involve too much of risk. The current scene on the markets tells us it is not too good to make a gamble on this thou.

Future trading is definitely a very good way to buy and sell on commodities. You need to begin with a separate account, and you would have access to it with the help of a broker or maybe even directly using one of the futures commission merchants.

You could also trade using an account under the name of a selected executor, one to whom you have given a power of attorney to do so. However we do not recommend this route unless you have an executor who you can trust completely, since this person will be dealing with your money. If you are not confident to deal single handedly then partnership may be a good idea.

Commodities trading, like any other commodity trading, utilize a principle called “leverage” to expand the reach of the investor. Much like mechanical leverage in your old physics class, financial leverage is about multiplying the amount of motion you get from the energy you put into a transaction.

How it works is like this: Instead of ponying up $10,000 of your own money to make a commodities trade, you put up about $500 (1/20th of the amount purchased), and borrow the remaining $9,500. Let’s say that your trade shifts by 10 basis points between the price you purchased the commodity at and the price you sold it at; you’ve made a $10,000 purchase and sold it for $10,100, making a $100 profit on the transaction.

Now, you will have to pay back the $9,500 you made, plus some interest on the loan. Let’s assume that the interest is 9% per year, and that you made the margin purchase and sale in a 24-hour period. If you held on to the $9,500 for an entire year, you would have to pay $855 in interest. Since you only held on to it for one day, you pay $855/365=$2.35 in interest on it.

Your net profit on your $500 investment is $100 (the profit from the transaction) minus the interest on the money you used for leverage ($2.35), or about $97.65, which is about a 19.5% rate of return in one day.

Margin trades are the fundamental tool of the trade of the day trader in commodities trading. They’re also useful for position traders to magnify their leverage on a market, particularly if they can get a good rate on the interest they’re paying on their margin run. Let’s say you make a trade that goes up, but you think it has farther to go; you can make an informed decision about how far up you’re willing to wait, or what signals you’re waiting for, and just pay the daily interest and fee on the money you borrowed for the margin run. Yes, it’ll eat into your profit, but it can be used to play a bet long rather than frantically watching for every possible blip in the market.

Leverage and margin are useful tools, but going back to the analogy from physics, they can be dangerous ones. Most trading houses will have a margin ratio – this is how many of your own dollars you have to put in for each dollar of leverage you get to exert. The reason for this is that many trade choices don’t pan out, and a call to pay back the money (a margin call) can cause an entire network of trades to go under if you default. (As an historical aside, most of the stock market and commodities and futures market horror stories in circulation were magnified by margin calls and leverage gone bad.)

If you’re serious about commodity trading as your job, and by serious, we mean willing to work 9 to 10 hours a day on it at odd hours of the night; leverage and margin are tools you should know. If you’re just dabbling in it, play commodities markets with a position trading strategy instead, and keep your margin ratios sane.

A popular new term in the investment market these days is commodities. But commodity trading is nothing new. In fact, commodity trading was recorded as early as in ancient China, where the imperial court would buy rice that has yet to be harvested from farmers to encourage farming and stabilize food prices.

Commodities refer to a whole group of goods such as foodstuff, metals or even fuel. In general, commodities are natural resources extracted from the Earth and are consumed by human activity. The prices of these commodities follow the basic principle of supply and demand. Supply comes mainly from mining and farming, and to a lesser extent, recycling for reusable materials. Demand is of course the consumption by human society.

The main channels to trade in commodities involve holding the actual goods in hand, trading in mining stocks or trading directly in commodity futures.

Holding actual goods in hand can be quite problematic. First you need a secure storage area to keep them, and you will need manpower to handle the physical goods. If the commodity has a shelf life, such as food commodities, storing them can be a headache too. Unless you’re e a trader who trades those commodities in the magnitude of tonnes, you’re better off trading commodities via other channels.

Mining stocks are a good venue for diversifying your exposure in the commodities market. Prices of commodities are dependent on supply and demand, but mining stocks can become profitable even when prices of commodities do not go up. Lowering of production costs of the commodity can increase profits without having the prices actually changing. This commonly happens in a recession when there is over supply of labour and production costs go down.

While commodity prices tend to go down during a recession, this occurs in conjunction with lowering production costs and this makes mining stock somewhat more recession resistant than normal stocks.

Trading in commodity futures is simply predicting the future prices of yet to be produced or mined commodities and paying a price to book them. Unlike physical ownership, there is no real inventory involved in futures. All you invest in is the ownership of future produce, and you can sell that ownership.

Trading in futures and physical ownership is simply a buy low sell high game of numbers, there is no real growth of the industry. But of course, trading improves market liquidity and results in a fairer trading environment. Investing in mining stocks is about using your money to grow a real business that creates more value; in this respect, investing in stocks in healthier for the economy than simply trading in futures.

However, when investing in mining stocks, you have no real influence over management decisions and industrial practice changes; therefore there is less control of your investment than futures where you buy or sell based on your choices.

Today’s investor should learn to diversify their investments into a whole range of products to minimise their exposure of risks in the economy. Even during a recession there are some products that go up; Gold, a form of commodity is one of them.

The intelligent investor should proportional his investment in different products based on the wider economic wide to tap into the best opportunities while minimising his risks. Commodities is one such product that one should take time to invest in.

Author: Eric Tai
Article Source: EzineArticles.com
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If you’re looking for various trading opportunities, then you should know that the world of commodity trading offers so many deals that most certainly you’ll find the right one for you if you know where to look.

People make trades on the market or on certain sectors only with the help of trading commodities. In time the commodity market has developed considerably and now even a few schools decided to introduce online commodity trading courses in their curriculum. Most courses are full-time but there are also other ones that will only last a few days.

By joining these courses, you will use modern tools and software to learn as much as possible about the commodity-trading playground and understand the important of contracts and the role of sectors trading. After completing the course you can use all that information to control your orders in the commodity market and in time become successful traders.

The courses are teaching the people how to spot a profitable investment and how to avoid any risky transaction. In the commodity market the traders can use various types of contracts depending on the traded commodity.

Also, the students will find out that the commodities are traded 24-hours a day, 5 days a week and some of them have a preset time period.

To sum up all the above, online commodity trading courses will tech discipline, technical tools and a successful plan to anyone that’s interested in this field of work.

Anyone can attend these courses from beginners to experts you can always learn something new that will help you along your way. The courses comprise both continuing and advanced education programs and from time to time you can even learn a few tricks from the best traders in the country because the school invites them to assist the courses and to teach the students discipline and financial preservation.

The teachers will offer their help and you can ask them to guide your first steps in commodity training.